Manufacturers invest millions in digital but struggle to find advantage

Can lessons learned apply successfully to digital transformation in manufacturing?

Recently I took part in a webinar with Industry Week entitled ‘Digital Manufacturing: Are you taking the lead or falling behind?’. Everything was going well until we asked the audience whether they thought the millions they had invested in digital transformation had brought them competitive advantage. Less than 3% said it had. So, what are the barriers for companies reaping the benefits of digital manufacturing?

The webinar was the culmination of research that OpenText and Industry Week has conducted on the digital readiness of manufacturers in North America. Our straw poll reflected the results we received from our wider research survey. Digital advantage was claimed by 26% of respondents. That left 74% failed to see any advantage, felt their competitors had the edge or simply didn’t know. These results are a surprise, suggesting that a great deal of money is being spent for not a great deal of return.

My interpretation of this is a little different. I’ve been working closely with an analyst that categorizes manufacturers into two groups;

Thrivers – companies that will look to implement new technologies quickly as they see the benefit to their business.

Survivors – companies that adopt new technologies later and hold on to them longer.

The Thriver organization is happy to accept the risk of early adoption to reap the rewards. Survivors take a risk-averse ‘if it ain’t broke, don’t fix it’ approach.

I believe what we’re seeing is a situation where companies are adopting the same technologies to address the same issues around operational performance and product quality. The early adopting Thrivers have gained some advantage but, as the Survivors begin adopting the technology, their investments are more or less cancelling each other out.

Digital advantage starts with enterprise data management

We began to look at the barriers to gaining digital advantage and one issue became clear: Companies are having increasing difficulty in handling and utilizing the growing volume of data within their business. When asked, two thirds of respondents said that they had difficulty in both collecting, storing and analysing information.

These findings are broadly in line with research OpenText conducted with Sapio Research earlier in the year to assess the digital readiness of manufacturers in Northern Europe. The European manufacturers placed the volume of data and analyzing that data as the second and third biggest barriers to Digital Transformation.

But, it’s not just the volume or structure of data. Our US research showed that companies struggle to gain 360-degree visibility across key business processes and functions. A good example is the 60% of respondents that said they couldn’t gain visibility of the content and information associated to an asset. We’re all aware that manufacturing businesses have developed into siloes of information – ERP, PLM, CRM, etc – and its clear that this approach is now affecting the effectiveness of digital investments.

The business applications for most manufacturers lack the capability to seamlessly transfer data and information to other business processes and applications. There’s an urgent requirement for an integrated information platform – like EIM – that overcomes this by playing three interlocking roles for organizations:

Digital Hub – central platform for the management, analysis and distribution of information. It provides contextual data and information related to applications that do not have a sophisticated repository such as ERP, PLM or CRM).

Digital Backbone – where the information does not exist within the platform, it becomes a conduit to share references to information locked in data silos. It is able to reference, extract, normalize and share that data as required.

Digital Archive – for regulatory and compliance purposes, the platform efficiently archives legacy and obsolete information. It maintains a live reference to the data for easy of access and retrieval.

This approach will overcome the first barrier. Manufacturers are able to tame the Big Data monster and are in a position to begin to exploit the value in that data. The next hurdle is analytics and here there may be very good news for manufacturing companies.

Analytics. Ahead of the curve?

You’ve got control of the data, what are you going to do with it? The answer from our research is that the leaders use it to deliver whole new data-driven products and services. When asked, 60% of digital leaders were creating new data-specific lines of business. My experience is that some companies are finding there is more margin in these new digital areas than in their original production process.

This got me thinking about the Rogers technology adoption curve. It appears to me that Big Data is maturing at the same time as the adoption of more advanced analytics is becoming a little more common and early adopters are looking to combine AI with analytics to deliver new levels of actionable insight to drive improved decision-making.

My point is that these curves are increasingly truncated. The manufacturing sector has been one of the slower industry areas to adopt analytics but that may just become an advantage. It’s becoming possible to jump generations of analytics and take advantage of more advanced and cognitive solutions that will actually deliver the advantage that companies are seeking from their digital investments. I’ll come back to this in a future blog.

Tom is Industry Marketing Strategist for the Manufacturing Sector globally.
An Engineer by Trade, and Mathematician by Education, Tom’s entire career has been spent in Engineering, Manufacturing and IT helping customers digitally transform their business and their manufacturing sector.
With Industry 4.0 and the Industrial Internet of Things, Manufacturing lives in exciting times, so there is much to talk about.